Wife said to have taken money in Skaltsis fraud case

Saturday

Feb 16, 2013 at 3:15 AM

By Michelle Kingstonmkingston@fosters.com

DOVER — In a recent court hearing the Secretary of State’s Bureau of Securities Regulation said Lorraine Skaltsis had withdrawn up to $43,000 worth of money of local residents who invested in real estate with her husband, Nickolas, between February 2011 and August 2012.

Lorraine Skaltsis has since filed bankruptcy, and after the public hearing held earlier this month, has been ordered by the court to not use money described as “reasonable traceable” to her husband Nickolas’ assets or entities.

On Feb. 1, Eric Forcier and Jeffrey Spill of the Secretary of State’s Bureau of Securities Regulation provided Strafford County Superior Court with a proposed preliminary order “enjoining respondents Nickolas Skaltsis and Liberty Realty Trust ‘from converting, sequestering, transferring, selling or suffering the loss of any assets or any assets in the name of any entity controlled by them,’ and to enjoining respondents Lorraine Skaltsis, Nicole Bosco (daughter), Roberto Bosco (son-in-law), Phoenix Asset Group, Inc., and Tobias Investments, LLC from ‘converting, sequestering, transferring, selling or suffering the loss of any assets that are reasonable traceable to assets received from respondents Nickolas Skaltsis or Liberty Realty Trust, or any entity controlled by them.’”

Nickolas Skaltsis was not in court and is still said to be at the New Hampshire State Hospital in Concord after attempting suicide in October.

Based on an audio recording Foster’s obtained from the court, Forcier said at the hearing that this request filed by the bureau was so they could continue their investigation into the bank accounts of Nickolas Skaltsis, who was charged in January on 19 felony counts of theft for operating a fraudulent investment scheme.

The bureau released a report in January that said Skaltsis’ total debts, between prior investments, secured deals, personal loans, partnership deals, a defaulted mortgage and the judgment against him brings his total debts to more than $1.2 million.

“We have been investigating since August 2012,” Forcier said, explaining the bureau is aware of 21 unsecured promissory notes where Nickolas raised $327,500 from local residents who invested in him, expecting their money to be acquired, rehabilitated and managed in real estate in Strafford County.

Investors were promised anywhere from 4-percent to 24-percent interest. To date, $312,500 of the money has not been returned to the investors and according to the bureau’s investigation, the money received was deposited into the Skaltsis’ personal bank accounts at People’s United and Citizens Bank. Nickolas has not purchased any real estate since he began receiving money from these investors in February 2011.

The bank accounts were sitting anywhere from in the negative to under $500 before investment money was deposited, according to Forcier, and were more often than not, at under $100.

Skaltsis would deposit money from an investor, typically checks of approximately $20,000, and within days, the money would be withdrawn from the account.

“I would say, under oath, that both Mr. and Ms. Skaltsis dissipated the investors money when they were deposited to the account,” Forcier said. “I will also say that Nickolas Skaltsis withdrew much more than Lorraine Skaltsis, but Lorraine Skaltsis, by my math and my review, definitely withdrew investor funds.”

Forcier said Lorraine had withdrawn $25,000 from Citizens and People’s United bank accounts “immediately after investor funds were there.”

Forcier said Lorraine also withdrew $18,000 from a Bank of America account that he said appeared to be used by Nickolas as the operating account for his daughter and son-in-law’s company, Tobias Investments, LLC.

“I should also note that that account commingled money with investors funds because investor funds were transferred from People’s United Bank account to Bank of America,” Forcier said.

The account, according to Forcier, was used for several purposes including Tobias’ expenses, but investors’ interest checks were also sent from this Bank of America account.

“It is my understanding that Tobias owns at least four properties to this day and those properties are owned by Tobias and those properties were rehabilitated by Nickolas Skaltsis,” Forcier said.

Forcier knows the $25,000 withdrawn by Lorraine from the personal accounts was investors’ money, but said the Bank of America withdrawals could have been a mix of investors’ money and money from Tobias.

He said it is possible that Lorraine used $43,000 worth of investor’s money, but because the Bank of America account had “commingled” with their money and Tobias Investment, LLC, he could not say for sure at this time.

Lorraine’s attorney, Hamilton R. Krans, Jr. said Forcier was giving the impression that the Ponzi scheme Nickolas was operating was a “joint venture.”

“Which I do not believe is true,” Krans said, later adding he does not believe there are withdrawals of $25,000 and $18,000 from these accounts made by Lorraine. He also said Lorraine has no money and is unemployed.

Although he did not have the exact check numbers with him, Forcier said he would be able to provide Krans and the court with each check and cash withdrawal that Lorraine made from all accounts, proving his case.

He said the money was taken by Lorraine in two different forms, either by checks made out to her or in checks to cash, which she endorsed on the back of each check.

Krans asked Forcier if during the seven-month investigation into the bank accounts of Nickolas Skaltsis, if he had looked back before the Ponzi scheme began to see if Lorraine was also taking money out of these accounts to pay to keep her household running.

He said he had not looked back very far, but with a brief recess, could receive documents from his office that say what she took out before, but said it would be different from how money was withdrawn over the 18 months of the Ponzi scheme.

“It was very, very clear to us that as soon as investor money came into the account at People’s United, usually within 10 days, it was all gone,” Forcier said. “I don’t think we will see that before 2011. Yes, we will see money from Ms. Skaltsis, but I don’t think the way it was done will be very different.”

A recess was not taken to retrieve the necessary documents. Instead, Krans was advised to look into Lorraine’s bank records himself, as he has full access to them. Forcier said Krans may have more access than the bureau does, as Lorraine is his client.

The order enjoining the respondents was filed in the afternoon of the hearing, in which the court granted the preliminary injunction on the terms proposed by the Secretary of State:

“…Funds and other assets made available to Lorraine Skaltsis by Nickolas Skaltsis were obtained by Nickolas Skaltsis through fraud; that there is no adequate remedy at law by which the funds or assets may be recovered if Ms. Skaltsis disposes of them; that the potential harm to the petitioner and the investors whose property he seeks to recover outweighs any harm to Lorraine Skaltsis; and that granting the injunction would serve the public interest.”

A permanent injunction hearing will be held after 90 days from the Feb. 1 hearing.